In the last posting we talked a little about privacy coins and how they differ from regular cryptocurrencies. Even though cryptocurrencies like Bitcoin aren’t entirely private, users still have a certain amount of anonymity when using them. However, other can still link your Bitcoin address to your personal information depending on your online activity. Let’s take a look at some of the most common ways others can link your identity and Bitcoin address based on your activity online. Having your identity linked with your Bitcoin address is not necessarily a bad thing! However, we’d like to help educate and spread awareness for those who are concerned with their BTC privacy online.
Giving Bitcoin Addresses to Exchange Platforms
One of the most common ways to have your personal information out of your direct control is with exchanges. While cryptocurrency exchanges are incredibly useful and common in the cryptosphere, you need to put a significant amount of trust in the platform.
When setting up withdrawals from popular exchanges like Binance, Coinbase/GDAX, Poloniex, and others, you’re handing over a lot of information. In order to create an account, users typically need to first verify their identity. This means giving the exchange your name, personal address, and other documents proving your identity. After that, when it comes time to make a withdrawal from the exchange, you also provide your Bitcoin (or other cryptocurrency) wallet address to them.
We’d like to note that many exchanges are still considered trusted institutions. Exchanges like Binance and Coinbase/GDAX have made a name for themselves by being reliable. However, because of their size, the exchanges have placed a large target on their back for hackers. Additionally, should the owners of the exchanges ever find themselves in the middle of a lawsuit with regulators, they may be forced to hand over personal information. While there is a chance of this happening, it’s minuscule. Trusted exchanges are still likely to be one of the safest options.
Buying With Bitcoin
This one’s a little tricky to try to get around. If you’re purchasing something with BTC or another cryptocurrency online, you’re going to need to hand over some personal information. Unless you’re looking to purchase something off of a local listing in person or doing a direct digital download, buyers need to hand over shipping information. Merchants need data for sending merchandise to customers or the product will never get there. There’s really no way around this one.
If the merchant is going with payment processor, say something like Bitpay, then even though the merchant may not see the sending Bitcoin address, Bitpay certainly does. If you’re using cryptocurrencies as, well, “currencies,” then there are a lot of ways to link your identity to your Bitcoin address.
Posting Bitcoin Address Online
The last way to link your identity with a Bitcoin address seems like common sense, but is often overlooked. For those involved in any type of online work in the tech or creative realm, this is nothing new. Artists and programmers working on open source or free to use material usually offer a donate option. Sometimes this is posted at the bottom of the site as “Buy me a coffee.” Othertimes it’s denoted with a “Donate here to contribute to _____.”
Either way, the donation box is open. While services like PayPal and Patreon are still popular, so are cryptocurrencies. Nowadays, it’s common to see a simple address posted at the bottom of a site for donations to the team/individual/project.
For example, let’s look at the bottom of CoinMarketCap.com, one of the commonly used crypto sites to check the pulse of the global markets. When we scroll to the bottom of the page we see this:
In this case, CoinMarketCap is a large company and the site likely has separate wallets established to help fund the project. However, there are plenty of situations where individuals post their own wallet addresses online. Whether it’s looking to fund-raise for a loved one or accepting tips, many have posted the information publicly online.
Should I Worry?
At the end of the day, the short answer is no. Other than attempting to evade taxes and participate in illegal activities, there isn’t any real reason for a single individual to worry about the risk of someone discovering their public address and name. If you are concerned with more privacy in your interactions online, then there are always steps to take. All you need to do is take a basic, common sense approach and not post your Bitcoin address publicly online with your name or willingly hand out personal information.
If you’re really serious about privacy, then you’ll need to start considering privacy coins for use. Even if users haven’t had any information compromised before, most are not using end-to-end encryption for internet access. Your internet service provider (ISP) and some governmental agencies are likely already fully aware of your BTC holdings.